Although many consider streaming of video games from the cloud services as a potentially huge business opportunity, given its compatibility with virtually any device, Nintendo remains skeptical. The management of the company is sure that while some things can be done using cloud technologies, in general cloud gaming will not provide the right user experience.

“A cloud is an attempt to process information online on a server, as opposed to doing so on individual machines in the hands of the users. […] This means that there are some types of games that can be put on the Internet and others that cannot. By the laws of physics, it always takes some time to transmit data, and given the current level of Internet technology, there is bound to be some latency during the processes of a server receiving data, producing images instantly and sending them back,” said Satoru Iwata, the president of Nintendo, during a Q&A session with financial analysts last week.

While there are things that cloud gaming cannot achieve, the technology still looks promising, particularly for Nintendo. The Internet-connection ratio for the Nintendo 3DS has reached a level that no handheld gaming device has ever experienced: in Japan and the U.S. the number of Nintendo 3DS units which have been connected to the network has surpassed 80%, according to Nintendo. Three of four Wii U consoles, or about 74%, are also connected to the Internet. Potentially, Nintendo could offer certain cloud gaming services in order to boost its revenue and provide unique experience to its customers. Moreover, keeping in mind that many game developers have criticized Wii U for poor CPU performance, it may make a lot of sense for the company to offload some of the computing (complex AI or physics effects) to cloud servers leaving only critical computing for the triple-core IBM Power 750 (1.24GHz) central processing unit.

Nintendo tends to believe that as long as there are dedicated video game consoles, cloud gaming technologies will not gain traction on the market as the former will always provide better experience.

“Our stance is that dedicated gaming platforms will not die out and we are determined to create a future where they will not,” said Mr. Iwata.

While Nintendo is skeptical about the prospects of cloud gaming, Sony Corp. is quite optimistic. According to market rumours, the company will use Gaikai cloud computing technologies to enable backwards compatibility of PlayStation 4 with previously-released titles.

Tags: Nintendo, Wii U, 3DS, Sony, Gaikai, Playstation, Wii